Can the sector innovate through troubled waters?

Amid turbulent times for the water sector, the seventh Northumbrian Innovation Festival welcomed thousands of guests seeking the answers to the sector's most pressing problems. Utility Week caught up with the firm's chief executive Heidi Mottram and chief information officer Nigel Watson, as well as witnessing some of the many innovations on display.

As flags fluttered in the – mostly – blue skies over Newcastle racecourse, I petted a robot dog (who was a very good boy), chatted about carbon in a queue for crepes and heard (possibly) the world’s first freestyle rap about leaky loos.

It’s fair to say my trip to the Northumbrian Innovation Festival was very much not the average day in the office.

But transporting people out of their daily grind is the whole point of the festival. Now in its seventh year, the event now welcomes thousands of visitors, all armed with white boards and post-it notes to jot down new ideas.

While walking around the site – temporary home to 40 sprints dedicated to water, customers, technology – it is easy to forget that this is a sector under increasing scrutiny.

I was particularly struck by the contrast between the attendees and the (not-entirely-unwarranted) perception of the water sector presented in headlines on a near daily basis. Energised thinking from enthusiastic people who passionately want to make water better for people, nature and for the future.

Of course the public criticism is not all unfair. Northumbrian itself missed 18 of 47 performance targets in 2022/23 including for supply interruptions, rate of mains repairs, leakage and external sewer flooding, which resulted in combined penalties of more than £17 million.

Across the sector performance varies but no company hit all of their outcome delivery incentives (ODIs) in Ofwat’s most recent performance review. The case for improvement is clear, and innovation is increasingly becoming recognised as part of the solution.

Over the week, the festival welcomed innovators from water companies, the supply chain, stakeholders, academia, students and the next generation of customers: school children tasked with how to make young people value water as much as mobile data.

In a turbulent time for the industry and what is gearing up to be a truly tough price control, is this the best or the worst time to be taking a risk on new ideas?

“We simply can’t fix the water industry’s problems, with the money available, without innovation,” Nigel Watson, chief information officer, said in recognition of the need to do so much more in the coming decades as the climate changes and infrastructure is under increasing strain.

The godfather of the event believes there has never been a more ripe time for ideas and the image that needs to be represented to the wider world.

“Innovation should be part of the story people need to see. We are operating a business that needs to run 24/7 in the face of climate change – we need to adapt.”

Shared solutions to common problems have emerged from the Festivals. Famously the National Underground Asset Register (NUAR) was born there, with the area under the race course mapped at the first Festival.

“The environment, the method or the combination of the two means people come together ad collaborate so readily, they forget their organisation and their pay grade.”

Watson explains the event has helped the company shift towards embracing novel thinking at all levels.  He says employees are “much more comfortable and confident with innovation” as one of the ways the company works to improve.

The huge event involves 20% of Northumbrian’s teams to put it on, so what’s the value?

“Our innovation pipeline currently has 109 ideas,” Watson says, “Which if they all come off, could improve the business by £60 million each year.”

However some non-starters are anticipated. Watson said around 40% would come to fruition.

Following the event each year, directors will gather to review the outputs from 40 sprints from the four days and distil these down to decide what the company wants to move forward with.

This year the sprints included reimagining environmental regulation via a single common regulator to bring together sometimes competing rules and expectations; how data can be gathered and used to best inform decisions on river health; what opportunities the next asset management period (AMP8) have to amplify the impact of business plans.

Siemens hosted a session on capturing and storing the untapped resources of energy from waste.

Southern Water ran a spring on leakage, featuring the in-home detection tool Leakbot and efforts to stop toilets leaking – which comedian Abandoman rapped about.

Sitting in the race stands overlooking the buzz of the festival, chief executive Heidi Mottram reflects on taking a holistic view of the complexities of the water sector.

“When there’s pressure coming from outside, people feel the need to react to that,” she says. “That causes people to get knocked about in the wind, but this is such a long-term industry. We all have long-term obligations and goals here so we mustn’t get knocked about or offtrack.

“That’s easily said, but I’m conscious it’s not always easy. These are big complex systems, you need to attend to all elements of them to keep them in balance and moving forward,” she says.

Amid rising public dissatisfaction and the need for water companies to adapt rapidly for the next price review, Mottram says Northumbrian is in a comfortable position.

“There’s a lot of noise about the sector and concerns, but I know we have a high performing company here with strong and stable investors, so we are very lucky.”

Mottram explains her approach to running complex organisations is to view them as a system rather a standalone entity.

She muses that while each company has a crucial role to play, it is of equal importance that regulators and government adequately support and set the tone for all to follow.

She says there are “elements that are undermining confidence” at a national scale. “Government and regulators need to challenge and push us to the highest standards, yes of course. But they also need to signal what they want and that they are supportive of companies playing their roles in the system.”

As part of that system, Mottram believes joined up input from the powers that be to signal stability, confidence and belief in what’s being done would give companies the assurance of knowing decisions they make for the coming decades will be supported.

Some of those decisions will be laid bare in October, as water companies in England and Wales publish their plans of what, where and how much to invest to meet goals set by government and the regulators.

“We’re in the final stretch of the race getting all the ideas polished and refined: The conversations with customers; the assurance of is it possible and can we deliver it; is the board confident in whatever we put forward. All of that machinery is running at some pace for us to be able to hand over the best possible plan.”

Despite this confidence, Mottram is by no means naïve to the mountain ahead.

“This price review is very different to any that has gone before it, so we all have to step up to that. Not just companies, everyone has to step up and play their part otherwise it won’t work.”

Addressing pollution is a key complaint about the industry that politicians have taken up as a battle cry. Last week Defra confirmed polluters will face unlimited fines for causing environmental damage.

While much was said about the threat of crippling penalties, Mottram doesn’t feel they will change how companies look at compliance. She says her company is working to drive down pollution because it’s the right thing to do, not because of the threat of repercussions.

“The idea that we’re doing this because we don’t want to get a fine, I mean, that’s just bonkers,” Mottram says.

Looking ahead to the work needed in the coming decades, Ofwat is backing innovators by extending the Innovation Fund, introduced at PR19. From 2025-30, £300 million will be available to develop ideas that will bring tangible improvements to common problems through the fund.